the dow jones industrial average index. brief history founders edward davis charles henry charles...
Post on 20-Dec-2015
231 views
TRANSCRIPT
The Dow Jones Industrial Average Index
Brief History
Founders
Edward Davis Charles Henry Charles Milford
Jones Dow Bergstresser
Brief History
• First DJIA released on May 26, 1896– Stock market was not highly regarded
– Prudent investors bought bonds
The Index brought about a great change in the way people regarded the stock market.
Brief History
• Index designed for everyday people to be able to discern stock trends
Like placing sticks in the beach sand wave after waveTo determine whether the tide is coming in or going out
Higher peaks and higher lows = Bull marketLower peaks and lower lows = Bear market
Brief History
• Daily publication in The Wall Street Journal began on Oct. 7, 1896
• Now, the DJIA consists of 30 stocks accounting for approximately 23.8% of the total U.S.
Company Structure
Dow Jones & Company is a subsidiary of
News Corporation
–7,000+ full-time employees
–Composed of 4 segments
Company’s Four segments
• Consumer Media Group: The Wall Street Journal, Barron's, MarketWatch and the Far Eastern Economic Review.
• Enterprise Media Group: Dow Jones Indexes, Dow Jones Financial Information services.
• Local Media Group: coast-to-coast group which publishes eight daily and 14 weekly community newspapers.
• Strategic Alliances: Smart Money, Vedomosti, Stoxx
Why is the DJIA so reliable?
• A stock is added only if it has an excellent reputation, demonstrates sustained growth, is of interest to a large number of investors and accurately represents the sector(s) covered by the average
• Maintained and reviewed by editors of The Wall Street Journal
• Most quoted market indicator in newspapers, on TV and on the Internet
• Discernable by most people• Reliably indicates the market's basic trend
Index Computation
• Average stock price of the 30 companies in the index
Index Computation
Major problem: Splits
Stock trading at $100 has a 2-for-1 split
- # number of its shares doubles
- Price of each share becomes $50
Brings down the average even though there is no fundamental change in the stock
Index Computation
Solution
Prices of the 30 stocks that make up the index are added
Then divided by the Dow divisor, which is constantly modified
Where to find it?
.DJI
Where to find DJIA Quotes
.DJI
Times Square New York, NY
Quiz
Name 2 of the 3 founders of the DJIA
Founders
Edward Davis Charles Henry Charles Milford
Jones Dow Bergstresser
Quiz
What does the DJIA indicate?
DJIA Indicates
Quiz
Who publishes the index?
Published by
Quiz
1.How many companies are represented by the index?
2. Can anyone name 3 of these companies?
30 Companies
MMM 3M Co. HD Home Depot Inc.AA Alcoa Inc. HON Honeywell International MO Altria Group Inc. INTC Intel Corp.AXP American Express Co. JNJ Johnson & JohnsonT AT&T Inc. JPM JPMorgan Chase & Co.BA Boeing Co. MCD McDonald's Corp.CAT Caterpillar Inc. MRK Merck & Co. Inc.C Citigroup Inc. MSFT Microsoft Corp.KO Coca-Cola Co. PFE Pfizer Inc.DD E.I. DuPont de Nemours PG Procter & Gamble Co.XOM Exxon Mobil Corp. UTX United Technologies
Corp.GE General Electric Co. VZ Verizon Communications GM General Motors Corp. WMT Wal-Mart Stores Inc.HPQ Hewlett-Packard Co. DIS Walt Disney Co.IBM International Business Machines CorpAIG American International Group Inc.
Quiz
What is the 3 letter ticker of the index?
Name 3 different places where you can get a quote.
DJIA Quotes
.DJI
QUIZ
What was the .DJI quote at market close today?
Are we in a bull or bear market?
Market pulse
Recession = evil = BEAR
Market is in a downtrend